LOS ANGELES, Calif., Sept. 4, 2002 — Metropolitan Water District's financial strength and stability translates into real savings for Southern California ratepayers through bond issues and a reduction in the district's property tax rate.
Today the district will refinance general obligation bonds originally issued in 1967 to take advantage of lower interest rates and easier administration, as well as sell water revenue bonds to fund its capital improvement program.
More than $56 million in general obligation refunding bonds, rated "AAA" by Standard & Poor's and Fitch Inc., and "Aaa" by Moody's, will be sold today by Metropolitan.
Metropolitan Chief Financial Officer Brian G. Thomas said this refinancing is the first step in the district's plan to refund a total of $186 million in general obligation bonds this year, the combined total of which will save Southern California taxpayers nearly $1 million a year over the next 15 years.
Next week, Metropolitan will sell $133.2 million in water revenue bonds to refund bonds and reduce debt service costs by another $600,000 to $700,000 per year.
For the third time in its history, Metropolitan will execute an interest rate swap agreement to lock in today's low interest rates.
"The general obligation bond refunding and the water revenue refunding bond issue are two examples of our continuing efforts to keep the costs low of delivering water to the 17 million people we serve," Thomas said. "Metropolitan's solid credit ratings and financial policies allow us to make the most of the money we raise to provide a reliable, high-quality water supply for Southern California."
Continuing Metropolitan's long history as one of the highest-rated municipal water utilities in Southern California, the water revenue bonds have received ratings of "AA/VMIG 1," "Aa2/A-1+" and "AA/F1+" from Standard & Poor's, Moody's Investors Service, and Fitch Inc., respectively. These ratings are based upon each firm's analysis of Metropolitan's financial health and creditworthiness.
Ramirez & Co., Inc. was the senior underwriter for the general obligation issue. J.P. Morgan Chase served as underwriter and remarketing agent for the water revenue bond.
In addition to the savings brought by these refinancings, Metropolitan's board of directors recently reduced the district's property tax rate by 12 percent, resulting in a lower rate for homeowners. At its August meeting, for the second consecutive year, the Metropolitan board reduced its property tax rate. This year the rate was reduced from .0077 percent of assessed valuations to .0067 percent for the 2002-03 fiscal year.
The rate reduction is due to higher assessed valuations of real estate throughout Metropolitan's six-county service area and reduced debt-service cost covered by the tax levy. Tax rate revenues will produce an estimated $97.9 million for Metropolitan — about 10 percent of the district's annual budget.
The Metropolitan Water District of Southern California is a cooperative of 26 cities and water agencies serving 17 million people in six counties. The district imports water from the Colorado River and Northern California to supplement local supplies, and helps its members to develop increased water conservation, recycling, storage, and other water-management programs.
Source: Metropolitan Water District of Southern California
